The economic fact is that there are as many jobs out there as there are productive workers. A worker who can create $10 of value will get a job that pays less than $10. A worker who can create $2 in value will get a job when the cost of employment is less than $2. Employers, in other words, hire workers to INCREASE PROFITS.
- Government regulations and labor market frictions often create a large gap between the cost of employment and the wages that go to the worker. Large gaps mean that workers who can produce, say, $40 in value per hour are not hired at $25 per hour.
- Many people are paid "too much" for what they produce because they have job security, have difficult-to-measure productivity, or because they con the Board of Directors into paying them crazy wages.
- Some workers (e.g., financial traders) are paid to destroy social value.
- Others get paid for their lobbying instead of production because they convince politicians or bureaucrats to give them Other People's Money.